FraudNews
02-05-2013, 11:06 PM
At least a dozen people have been arrested by federal agents for their part in a credit card fraud scheme, in what the Department of Justice has uncovered as being the largest of its type.
According to Paul Fishman, New Jersey’s U.S. Attorney, there were massive losses, costing credit card issuers about $200 million. Fishman points out that $200 million is a conservative estimate and the amount could be significantly higher.
Fishman said the scheme demanded both patience and skill to be carried out successfully.
18 people – mostly residents of New Jersey and New York, ostensibly ran a ring, producing 1,800 dummy addresses and over 7,000 false identities using bogus documents, bought Social Security numbers of Americans moving away from the country and a number of other ways. In the last six years, these folks attained over 25,000 credit cards using both the identities and bogus addresses.
According to officials, after they had secured the credit cards, the ringleaders would use a number of methods to increase the credit rating of every straw customer. Tiny purchases would be made and the money that was borrowed would be paid back to increase the credit rating. These straw customers would borrow money from tradelines or phone lenders who would take out fake debt after some time to look at though the borrowers paid the loan back. It’s another attempt to raise the credit score.
Once the straw customer’s credit card had a large credit line, it would then do a bust out, which would then rack up copious amounts of debt without every paying it back, keeping the profits for themselves and the issuers dealing with the fallout.
One technique, the government alleges the ring used, to get cash from the cards, was create bogus companies to accept the credit card payments. A purchase could be made at the bogus company and the credit card company would reimburse the “merchant”.
There were also a number of actual businesses involved with the scheme including several jewelry stores in the Jersey City area. Federal authorizes had already arrested four people and took control over $2 million in gold from one jewelry store in the area.
Most of the money was sent by wire overseas - $60 million has been transferred to accounts in Canada, India, Japan, Pakistan, Romania, Saudi Arabia and many other places. Fishman said authorities have no reason to believe the money was used to support terrorism.
According to Paul Fishman, New Jersey’s U.S. Attorney, there were massive losses, costing credit card issuers about $200 million. Fishman points out that $200 million is a conservative estimate and the amount could be significantly higher.
Fishman said the scheme demanded both patience and skill to be carried out successfully.
18 people – mostly residents of New Jersey and New York, ostensibly ran a ring, producing 1,800 dummy addresses and over 7,000 false identities using bogus documents, bought Social Security numbers of Americans moving away from the country and a number of other ways. In the last six years, these folks attained over 25,000 credit cards using both the identities and bogus addresses.
According to officials, after they had secured the credit cards, the ringleaders would use a number of methods to increase the credit rating of every straw customer. Tiny purchases would be made and the money that was borrowed would be paid back to increase the credit rating. These straw customers would borrow money from tradelines or phone lenders who would take out fake debt after some time to look at though the borrowers paid the loan back. It’s another attempt to raise the credit score.
Once the straw customer’s credit card had a large credit line, it would then do a bust out, which would then rack up copious amounts of debt without every paying it back, keeping the profits for themselves and the issuers dealing with the fallout.
One technique, the government alleges the ring used, to get cash from the cards, was create bogus companies to accept the credit card payments. A purchase could be made at the bogus company and the credit card company would reimburse the “merchant”.
There were also a number of actual businesses involved with the scheme including several jewelry stores in the Jersey City area. Federal authorizes had already arrested four people and took control over $2 million in gold from one jewelry store in the area.
Most of the money was sent by wire overseas - $60 million has been transferred to accounts in Canada, India, Japan, Pakistan, Romania, Saudi Arabia and many other places. Fishman said authorities have no reason to believe the money was used to support terrorism.